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Vacation Rental Property

Question: My borrower is purchasing a single family property as an investment. The property detail within the contract addresses the property as a VRBO- (Vacation Rental by Owner) or AIRBNB.

• Do the Conventional agencies consider these as bed and breakfast?
• Is the intended property use allowed?
• Can we use rental income to qualify?

Answer: As verified with both Fannie Mae and Freddie Mac; The Intended purpose to purchase a weekly rental such as a VRBO & AIRBNB is allowed; however the use for rental income from the property is not allowed as there is not a standard lease agreement - Fairway requires a lease agreement (generally 12 mos) & receipt of security deposit check.

VRBO & AIRBNBs are not viewed as "bed and breakfast" property types which are ineligible per guidelines.

If the property was being refinanced; the use of rental income would be allowed based on tax returns - dependent on how many months the income is claimed on the schedule E and supported market data.

Please be reminded regardless of the use of income; the agencies still require documentation of the gross rentals for the rental unit with the correct appraisal forms.


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